New fiscal incentive package for the housing market

Simplified Affordable Leasing Regime (RSAA)

The RSAA will replace the current Affordable Leasing Program, maintaining the policy of incentivizing the supply of housing at controlled prices, but with clearer and more streamlined rules.

For the purposes of applying the regime, the following are eligible:

• Type: Lease agreements, leases for residential sublease, and residential subleases, as well as those concluded under programs approved by municipalities and intermunicipal entities aimed at encouraging the supply of housing in the affordable leasing modality;

• Parties: Concluded by private landlords and public entities, provided they comply with rent limits and minimum terms;

• Rent cap: The monthly rent may not exceed 80% of the median rents published by the National Statistics Institute (INE) for the municipality where the property is located (limit to be defined by joint order of the Finance and Housing areas);

• Minimum duration: For permanent residence, the agreement must have a minimum duration of 3 years. For temporary residence, the minimum term is 3 months.

Agreements concluded under the RSAA benefit from a full PIT and Corporate Income Tax (CIT) exemption applicable to rental income derived from these Affordable Lease Agreements.

The regime takes effect from 1 June 2026 and applies to new agreements and renewals.

Tax incentives for the construction, rehabilitation, sale, and leasing of residential property

For PIT purposes:

• Capital gains exemption: Full exemption from taxation of capital gains generated on the transfer of residential property, provided that the proceeds are reinvested in the acquisition of properties intended for residential leasing with rents of up to € 2,300;

• Progressive increase in rent deduction from tax due: In 2026, the deduction limit is €  900; in 2027, the deduction limit is € 1,000;

• Autonomous tax rate on residential rents: Rents up to € 2,300 arising from residential lease agreements benefit from a 10% autonomous taxation rate.

For CIT purposes:

• Partial inclusion of rental income: Only 50% of rental income from residential lease agreements with rents up to € 2,300 is considered for taxation.

For VAT purposes:

• 6% VAT on residential construction and rehabilitation: Applicable to construction and/or rehabilitation works on properties intended for sale for the purchaser’s own or permanent home, or for residential leasing.

Alternative Investment Undertakings (OIA) with assets allocated to the RSAA

• Special 5% rate applicable to distributions: Income distributed to participants/shareholders of OIAs is taxed, insofar as it relates to results of the immediately preceding period, at a 5% rate, in proportion to which, in that period, the OIA’s income derived from lease and/or sublease agreements covered by the RSAA or legally similar regimes;

• Exclusion from taxation up to 30% (distributions, redemptions, and liquidations): Partial exclusion from taxation at the investor level, determined by tiers according to the percentage of properties intended for lease and/or sublease covered by the RSAA/similar regimes. The exclusion applies (i) to the remainder of distributions not covered by the 5% rate and (ii) to income from redemption or liquidation, and may reach 30% when eligible assets exceed 50%.

Partial VAT refund regime

• Individuals who acquire construction contract services for properties as their own permanent residence, outside the scope of a business or professional activity, where VAT becomes chargeable by 31 December 2032, may request the difference between the amount of VAT actually paid at the standard rate (23%) and the amount that would result from applying the reduced rate (6%).

• The acquisition value of the land (or, if higher, the tax registration value), plus construction costs of a permanent nature, may not exceed € 648,022.

• The refund request must be submitted within 12 months after the issuance of the documentation related to the start of use, and the tax authorities have 150 days to refund the tax.

RETT for non-residents

A RETT rate of 7.5% applies on the acquisition, by non-residents, of an urban property or an autonomous unit of an urban property intended for housing, except where one of the following situations applies:

• The purchaser has been considered a tax resident in the national territory;

• The purchaser becomes a tax resident within two years from the date of acquisition;

• The property is intended for residential leasing and the rent does not exceed € 2,300. The lease must be concluded within 6 months from the date of acquisition for at least 36 months, consecutive or non-consecutive, during the first 5 years.